Why is LinkedIn a much better business than Facebook?

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The short answer is this… “three words”.

Commercial Intent

Monetisation

That is, users go to LinkedIn with a commercial purpose – to find a job, find a business contact, hire an employee, to do a deal.

LinkedIn users do not gossip about food or movies. They do not play games or share pictures of dogs or sunsets.

LinkedIn then monetises this content with subscription services, recruitment services and advertising. The result? The market has doubled the value of LinkedIn since it went public and almost halved the value of Facebook since their IPO.

There is little commercial intent in using Facebook (much like email) and there is little effective monetisation of the avalanche of Facebook user activity.

Will LinkedIn be around in 10 years? You bet. Will Facebook? Maybe not successfully.

For a good validation of the “buy LinkedIn, sell Facebook” suggestion, check out this overview of LinkedIn’s 2nd Quarter Results:

http://in.reuters.com/article/2012/08/02/net-us-linkedin-results-idINBRE8711MW20120802

© 2013 – 2014, Philip Alexander. All rights reserved.

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